It's too late to do anything about your 1998 taxes--other than maxing out your IRA contributions and filing your returns. But don't ignore the flurry of tax tips offered this time of year by magazines, newspapers and TV. Use them to improve your 1999 tax situation.
"It's already February, so forget what you `coulda, shoulda, woulda' done in 1998 and concentrate on 1999," suggests CPA Ed Slott. "Apply new tax tips and other advice to the current year."
The Rockville Centre, New York, accountant sees "too many [entrepreneurs] who come in without expense documentation--particularly the more successful start-ups," he says. "They're so focused on getting customers and launching their businesses, they don't take time to collect receipts or write anything down."
If you're more interested in running a business than in keeping books and records, Slott urges you to label a large manila envelope "1999 Taxes" and put all expense receipts in it. "It's the easiest bookkeeping system I know," he says, "and there's no reason not to start it now. Many businesses incur major first-year losses. Those are the returns most likely to be questioned and audited by the IRS. So save every receipt, even if you don't think it's a deduction. Your accountant can make that determination."
Should you mark each item or maintain a journal of expenses? "Not if [doing so will] get in the way of collecting the receipts in one envelope," says Slott, who publishes the monthly newsletter Ed Slott's IRA Advisor. "Keep the system simple to encourage you to do it. You may have missed some write-offs last year, but this will help maximize your tax deductions from now on."